A Theoretical And Empirical Analysis: Exogenous Shocks Impact On Structural Real Exchange Rate

With the important of China's role in the international economic trade and the increase of its foreign exchange reserves, RMB exchange rate becomes an important economic variables which have influence on the world economic and trade development .The marketization and fluctuation of RMB exchange rate laeds to the enhance of the attention that domestic and foreign scholars show out. At present, the domestic scholars made detailed analysis of nternal factors which have influence on the exchange rate fluctuations , but the research on the shocks such as factor productivities, factor endowments, terms of trade, debt shocks and new natural resources impact on real exchange rates is not enough. We utilize the model to analize the effect that exogenous shocks act on the structural real exchange.We are based on the Equilibrium Real Exchange Rates Theory . We develop a GEM model and construct a theoretical Salter-Swan neoclassical open macro model to determine whether factor productivities, factor endowments, terms of trade, debt shocks and windfall discoveries of new resources impact on real exchange rates,factor retributions and production levels or not. Furthermore, we claim to determine how the income distribution influences on the magnitude of the real exchange rate response to exogenous shocks. Since the 1970s, with the rapid development of China's economic, exchange rate as a basic economic variable has an important role. The domestic and foreign scholars have an increasingly studies on the real exchange rate (RER), they hold the views that the terms of trade is one of the influences on the real exchange rate. By using the model, we make empirical analysis .Our results suggest that the magnitude of the real exchange rate response to exogenous shocks depends on the income distribution between sectors and factors as well as, on the debt structure of the countries under analysis. Furthermore, Exogenous shocks lead to distributional income effects through reallocation of resources. As a result, the real exchange rates response to exogenous shocks may be variable and different between countries. For instance, current TFP shocks in the exportable (importable) sector increase the real exchange rates response to upcoming exogenous shocks of this characteristic. Non-tradable market imperfections mean lower structural and PPP's real exchange rate but it is not clear whether exogenous shocks will impact on less or more proportion to the real exchange rates.Empirical results show that the terms of trade have the same direction impact on the internal real exchange rate of RMB. When the terms of trade are improved , the internal real exchange rate of RMB will appreciation. When the terms of trade are deteriorated , the internal real exchange rate of RMB will depreciation.